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Every industry is degililising in the 21st century and the fashion industry is no different. It can be noticed in the luxury fashion industry too that the adoption of technological innovations is being applied. This allows these organisations to gain a strategic edge over adversaries and provide a greater customer experience to the final consumers. When it comes to luxury brands there is a tendency for those brands to stay traditional and ornate. However, as the industries try to stay balanced with finances and reputation both they are adopting technologies such as AI rendering technologies to help boost the customer experience and excel in markets. This allows them to reach more people rather than depending on the people to come to them based on their reputation. This is because in the age of machines every company is able to achieve relative perfection in their finished products and branding and marketing today play the biggest part in being recognised as a luxury brand or not.
This makes boosting the customer experience a necessity so that the customers are provided with all the convenience and service that makes them feel special like a luxury brand does. Customer experience is a major part of the creation of a luxury brand. Here all people are treated with special care and attention. That not just boosts experience but also creates brand loyalty. In this report hence, the adoption of technologies by luxury fashion brands, the industry trends, the market environments, brand management, and issues are going to be developed through secondary research. As per the findings, relevant recommendations are to be also provided for the solution of issues.
The fashion industry is characterised by a large number of worldwide brands that are existing on the world stage and are MNCs, conducting business across the world. Then there are the domestic organisations that are conducting business locally with their producers being present in the same country. Apart from these two, there exists a third type of fashion business that promotes their productions as luxury based on the fact that their clothes are not mass-produced and there may be just two or three of those in existence.
These are the smaller boutique companies that make clothes with an exotic appeal, these are small-scale producers that make use of quality materials and have original designs that people love and they benefit other fashion brands to than just the luxury brands (Teonaet al. 2020). These small businesses are the closest to a luxury brand that they can get. However, their reach is always limited, and thus is important for them to maintain an online presence and use internet algorithms to enter public view through paid promotions. They do not have as much volume of sales and hence are dependent on the individual pieces they sell. Some examples of these types of companies are suits tailors such as Huntsman of Savile Row, Gaziano and Garling, Brooks Brothers, and so on. These are usually companies that have been established for over a century or more and they market themselves as brands for the privileged.
.png "The list of most popular fashion brands in the UK")
Figure 1: The list of most popular fashion brands in the UK
(Source: Statista, 2022)
On the other hand, the MNC luxury brands also limit the number of pieces produced and have innovative and original designs but most of their designs are still based on rudimentary clothing styles as they have the need to appease a broader audience (Bai et al. 2021). This builds exclusivity in the market and allows them to sell their products at a higher value. These companies are characterised as having much higher brand value.
The ability of luxury businesses to adapt to new technology has become crucial in today's society. This is due to the fact that the craftsmanship and artistic sophistication that made a brand a luxury brand has been exported to foreign nations as mentioned above. Therefore, the apparel item's design and price are the only factors contributing to its aspirational value, making customers want to own the goods. Therefore, it is necessary to draw customers to the stores rather than the vice-versa happening as it was in the past. Besides that, the recent pandemic has shown businesses the power of the IoT and the importance of maintaining a b online presence to reach more customers and maximise sales.
The online stores allow them to click and buy various types of items and provide people with the instant gratification they seek that is a much faster way of selling rather than the people having to actually arrive at the physical store to fulfill their clothing wants. Luxury clothing and accessory items are based on the want of something rather than need. Hence, the glorification of items raises their prices for them. The greatest example would be Diamonds which is a semi-precious gemstone but has been marked as a symbol of love and is now priced worldwide higher than other truly precious gems. One can observe similar trends regarding platinum that is cheaper than gold but in jewelry, form is much higher in price. A similar trend for luxury clothing materials such as silk can also be seen in the luxury fashion domain.
Online stores are one of the most used technologies in the fashion industry in general as they maintain a presence online and offline (Imd.org, 2022). Offline stores have a reason to maintain an online presence as they need to reach a wider and global audience. The people need to be made aware of the brand and reach the people. In the same online stores, new and innovative software is used to boost the customer buying experience. Hence it can be said that online stores open the gates for luxury brands to incorporate the use of more technologies.
CAD (Computer Aided Design) is used commonly for the designing of plans and blueprints in 3D for machinery and architecture. In modern parlance, fashion technology is also aided by CAD (Musa and Agu, 2021). This makes the designing process more sophisticated for better quality of design and innovation in the clothing industry. The use of alternate materials for the production of the clothing item and their seamless incorporation in the final product becomes possible using CAD. Apart from that, According to Musa and Agu, (2021), using CAD also aids in better and more efficient designing of layers and layered clothing.
.png "CAD design for fashion tech")
Figure 2: CAD design for fashion tech
(Source: Scan2cad, 2022)
Luxury Fashion brands have through the use of data reached new heights in the field of digital personalisation. An example of this would be Nike shoes that provided NFTs for every shoe design, a customer can then purchase and own the design, and a one of a kindcustomised footwear can be then designed by the client to be custom manufactured by Nike (Imd.org, 2022). Personalisation is one of the distinguishing features of the luxury niche of fashion brands. According to Wang et al. (2020), NFT based products are the future of the fashion industry and play a big role in the determination of customer preference and customer based fashion trends.
When the organisation is limited in scale, it is easier for them to maintain better customer relations. However, as the scale and size of the company increase, it becomes harder to maintain the same quality of relationship with the customers (Imd.org, 2022). This is the reason data driven operations has become important. The automated algorithms that may or my not be powered by AI is used to access the customer choice and preferences and sends personalised automated machines inviting them to the shop and presents them the items they may like. However, if luxury brands are considered, followup needs to be done through customer executives for an additional personal touch.
The use of AI is useful in data driven operations, 3D trials and in the calculation of market driven forces analysis (Liu et al. 2019). The programme can anticipate with a high degree of accuracy how the customer's top of the head, neck, and back of the head will look based on a 2D image using the database of faces. The customer can take advantage of this from the convenience of their homes and have a physical trial. This is a new function that has been added to the websites of luxury fashion companies. The 3D simulator is now being used by several firms to help customers make decisions while purchasing online.
The use of global technologies has been the characteristic feature of the fashion industry. This adoption of digital technologies allows the companies to be able to achieve expansion, sales turnovers, and marketing and production efficiency that is unmatched by the previous generation of luxury clothing and accessories businesses.
It has been determined that the selected manufacturing organisation concentrates on enhancing various dimensional circumstances in order to promote sustainability (Thorisdottir and Johannsdottir, 2019). In fact, several strategies for boosting stable growth will aid nature in fostering ber social ties. Sustainability has been linked to social, environmental, as well as economic factors, as has been acknowledged. For the betterment of their customers' quality of life, these components typically gather information and possibilities to improve sustainability and also develop a sustainable nature. Overall, it can be said that a manufacturing firm may easily conduct its sustainable operations for the good of the environment with aid of a more sustainable nature.
.png "Recycling wool")
Figure 3: Recycling wool
(Source: Theguardian.com, 2022)
Environmental sustainability is the need of the hour and luxury brands have capitalised on the idea to generate a new line of eco-friendly products at higher costs. For example Burberry and their sunglasses that are made of recycled materials. By 2025, Burberry hopes to obtain only nylons and polyesters that are 100% certified recycled, with nylons or polyesters being specified as the primary materials (Burberry, 2022). Similar trends are being followed in the luxury fashion industry by many producers.
The use of AI technology to render an image of how the customer should look in the cloth is often used. Designed specifically for people that prefer to buy online, this type of technology allows them to access the way the piece of clothing may look on them without being present in a physical trial room at a store. The same can be done for accessories as AI enables the websites to render a 3D image of the customer wearing the particular piece of jewelry accessory or clothes that they can view in a 360-degree view.
This is usually7 achieved through the “Neural Radiance Field (NeRF)” using AI algorithms (Chen et al. 2022). Based on the database of faces the algorithm is able to predict with a high level of precision how the rest of the face, back of the head, neck, and top of the head are of the customers based on the 2D image. This allows the customer to get a physical trial experience from the comfort of their homes. This is an additional feature added to luxury fashion brands' websites.
A particularly notable trend in the fashion industry is the global expansion of luxury fashion organisations. Joint ventures, franchising, operating subsidiaries, and other similar tactics are the most often used market entry techniques by fashion houses in the twenty-first century. With only a small investment in fixed assets, a joint venture enables them to rapidly increase their market share in overseas markets. However, the recent pandemic has broken the financial prowess of the companies to expand globally forcing them to rely on mergers and collaboration with each other for more turnovers. The companies need to encor[porate technologies to read the market better and employ better risk management strategies as that is important for gaining back the lost market stability (Kaufmann, M. and Wiering, M., 2022).
The idea of franchising, on the contrary side, is the sale of licenses to businesses that are capable of manufacturing and selling their original designs for them to produce and sell under the particular brand . This is a far more advantageous strategy because it requires almost no resource commitment and allows the company to take advantage of demand in international markets. In contrast, establishing subsidiaries abroad entails significant financial outlays as well as compliance with trade laws, licensing requirements, and other procedures. But it enables the business to establish a b, independent presence in the market.
Brands can take use of one other's resources, audience, and reputation by collaborating. High-street merchants and newly rising luxury businesses both benefit greatly from collaborations in terms of marketing (Bai et al. 2021). This is especially true for the upcoming luxury brands as they need top build their base first. Mean while the bigger andmore established brands do not merge with each other unless they are seeking to make the limited edition product to promote themselves for a limited period of time. This is because luxury brands do not market themselves like non-luxury brands. According to Mradet al. (2019),they promote themselves through PR campaigns using the news media. A merger between the two big brands or co-branding strategies are covered by news that leads to their promotion and advertisement.
Low and high brand collaboration
Most noted and unconventional collaboration is the collaboration between the H&M and Karl Largerfield and it was known as the high-low collaboration (Luxurylondon.co.uk, 2022). This is when a luxury brand collaborates with a brand that is a non luxury brand or is lesser known. This is where the luxury brand makes use of the scale and size of the lesser brand for mutual profit. However, this particular one between H&M and Karl Largerfield failed to find much traction in the United Kindgom or other places they aimed, such as the United States of America.
Merger with foreign brands & non clothing fashion brands
Tifanny& Co. collaborated with Louis Vuitton that is a collaboration between a company of the UK with another luxury brand of Paris, France (Thefashionlaw, 2022). This collaboration between the two companies can be called a collaboration between two different neches of the luxury fashion brands. This is because Tiffany & Co. is a jewelry and jeweled accessory brand while Louis Vuitton is a clothing and accessory brand. Together they made limited edition products that was available on their online stores for a limited period of time.
Upcoming Events and collaboration
Kiya Gerber and Zara are also luxury brands that collaborated with each other that is an upcoming event that has been planned and they are about to execute this plan in the year 2023. They have decided to make clothing items together using the co branding strategy. They have decided to co-design women’s clothing that is timeless and never goes out of fashion (Refinary29, 2022). This is a much awaited collaboration that has been talked about by the press for a long time. The designers of the two companies starts working from late 2022 itself.
The government of UK conducted a survey in the year of 2021 to find out that about 2000 companies that are based in the United Kingdom have started merging and collaborating with other brands (Gov.uk, 2022). This is mostly because the recent global pandemic destroyed most of the production and marketing capability of the companies and they are being forced to compensate through working together (Gov.uk, 2022). The equation with luxury brands are slightly different but it cannot be denied that they got affected as well.
Problem solving methods have been based on observation and of te collected data.The collected data was analysed to identify the issues with the industry, the economy that are affecting the industry and the factors that are leading to fall in demand and supply (Balleeret al. 2020). Inflation, market competition and other factors are examples of this. There has been identified issues with the lack of sustainability in the operations of many companies. The people are the ones that suffered from this as these activities increased the pollution in the environment. There has been recognised issues with the market conditions due to brexit, inflation and the recent pandemic (Breinlichet al. 2022). Then there are the existence of competitors and threat of new entries and substitutes.
The theories used to identify the problems with the luxury fashion brands are facing has been mentioned in this section. The identification of the issues and their causes are going to be used to yield sollutions for the same in the recommendations section of the report. For the purpose of this project the tried and tested Porters model is used as a lot of the issues identified during the secondary data collection have been noted to be related to market forces.
The fashion industry exists in the market of UK that has been ravaged by the recent global pandemic and other political-economic factors such as inflation and Brexit (Springford, 2021). Hence to analyse the strength and weakness of the market the Porters 5 forces has been used (Bruijl and Gerard, 2018). This is because market condition undoubtedly affect the firm performance.
.png "Porter’s 5 forces model")
Figure 4: Porter’s 5 forces model
(Source: Bruijl and Gerard, 2018)
It has been identified that there are many companies trying to enter into the luxury jewelry niche and thus increasing the factor of “existance of market competitors” and “threat of new entrants”. Then the companies are facing according to the Porters 5 forces model the issue of “Threat of substitutes”. As mentioned before there is negligible difference in quality and between the luxury brands and the material or manufacturing quality of luxury brands as most of them are machine made by workers abroad. However, the boutique industry that makes custom pieces of clothing and jewelry with exotic and alternative materials are the ones that are not facing the threat of substitutes.
The recent pandemic and Brexit has given rise to a third threat that otherwise would not have existed, the “bargaining power of suppliers”. Due to the covid pandemic most of the manufacturing units of raw material production and secondary processing units have been shut down. According to Gereffi (2020), this lead to the breakage of supply chains and the rise in cost of the existing stock due to bargaining power gained by the suppliers of raw and procressed materials for clothing as well as transportation and other additional charges. The factor of “Rivalry among existing companies” have always existed in the market of luxury brands. Hence it can be noted that the companies are at a disadvantage from nearly all market forces except the “bargaining power of the customers”. However that factor affected the luxury brands as well due to the lack of purchasing power of the people.
Overview of the micro environment
The businesses environment they are operating here is the UK cities, this is the micro environment of the industry. The companies are funcytioning within the confinement of the domestic market. Some of the companies are MNCs that have the support of foreign findings and some are absolutely local. Some of the MNCs are the ones that have entered through the strategy of franchising, joint ventures and some of then have direct subsidiaries. However, they are all in the luxury niche of the industry and the use of technology is prevalent among them.
The people have been the ones that helped shape the market for luxury products with demand and want for these items. The Macro environment is characterised by the existence of technology and innovations to boost the customer experience with technologies such as NFTs for customisation of pieces. Use of AI algorithms to aid in the trial of cloths and ornts and execution of data driven processes and so on. All this has been given rise by the wants for these things by the people and the need of the brands to promote themselves as luxury brands. The British fashion luxury industry is characterised by the presence of online stores as well as offline retail centres. This is characterised by the need to maintain an online presence for the companies and reach new people in the process to make a wider base of potential customers.
Impacts of the micro environment
The micro environment impacts hence in more ways than one as there are several factors affecting the companies that are micro environmental in nature. A notable impact is that the industries are in a relatively small market characterised by the existence of many fashion brands that are competing against each other to capture the market. The second impact is that due to the micro environment and the factor of competition, these industries are highly modernised and innovative providing extra services for customer experience and customer relationship management.
Overview of the macro environment
The macro environment that the companies are operating in the UK is affected by many factors. The Brexit has been an important factor in the shaping of the macro environment. There are other factors such as the high inflation rates that has characterised the macro environment. Apart from that the world wide pandemic has been a major factor for champagne the macro economic and political environment for the businesses and the people. The people have been there fore impacted along with the industry due to these factors and each other.
Impacts of the macro environment
The impacts have been significant, the pandemic has destroyed the local economy and the global economy there by breaking supply chains and cutting off production. The money in the hands of the people had reduced leading to the stoppage of sales. This calls for the automation and establishment of the supply chain from local producers. This has been a significant impact. Businesses have reacted to this circumstance by nearshoring, growing their supplier base, regionalizing their supply chains, and increasing their inventory of essential commodities. This makes it clear that businesses are concerned about enhancing the flexibility and agility of their supply networks during the pandemic.
A brand's reputation and image are managed and developed through brand management. Differentiating the firm brand from that of its rivals, encouraging favorable consumer associations, and building brand awareness are the key goals of brand management. It has been determined that high-end brands are to blame for waste, irresponsible material disposal, and pollution. A good illustration of this kind of work is Burberry Plc. These businesses have a sizable number of connections to the celebrity and model market thanks to their commercially successful designs, which helped to establish the brand in the luxury clothes industry. According to the report, enterprises in the fashion industry must improve their brand value by maintaining their image.
Consequently, social service tactics have been suggested for the business. To reach a larger audience, it has been advised to diversify communication methods and strategies. The need for cultural sensitivity has indeed been emphasised because clothing is an integral element of culture and the wrong kinds of clothing could not be as popular in a given nation. Burberry must change its rigid delivery process if it wants to attract more customers. Price variety and a diverse target demographic can both add value to the company's brand. This is one of the strategies used for brand management in the luxury clothing and jewelry (fashion), industry.
The luxury fashion companies sell their goods on the international market using a premium or high price strategy. The companies compete in the product on the basis of product durability, design, and consumer perception since it has the image of a luxury brand. The organisations give their employees the tools they needed to express their ideas and grow both professionally and emotionally. Currently, the businesses are leading the charge amongst other luxury industries in providing clients with sustainable products (clothing). The business of Burberry is run entirely on renewable energy sources (Burberry Plc, 2022). The same can be partially said for Zara as well. Additionally, none of the company's garbage from its numerous operating locations is sent to landfills most try to recycle and upcycle their products (Sabanoglu, 2022).
Brand awareness is an important step in the brand management of luxury products niche in the clothing industry. The guiding principles of the companies in the luxury clothes sector should represent discovering, inspiriting, and safeguarding. Instead of just louder commercials, this corporation bases its actions on the results of its marketing and sales efforts (Bae, 2019). They are constantly in rivalry with other well-known luxury companies in the same category, like Louis Vuitton, Dolce and Cabana, Armani, and others. In order to effectively reach potential clients, businesses employ platforms for advertising including social media, radio, television, OTT platforms, and billboards. It is necessary to use both contemporary and conventional marketing strategies for promotion.
For successful brand association building, luxury fashion firms need to have enormous fame with the marketed garments and a number of celebrities as buyers. The businesses must locate celebrity endorsements in the marketplace. Given that they have a sizable fan base, which enables the brand to draw in a sizable percentage of consumers, this is the case (Olteanu, 2020). In addition, these businesses need to support several fashion events to advertise their brands, particularly in the international market. This way a proper brand association needs to be built to benefit the business and this is a major part of brand management for a luxury fashion brand.
The use of social media is one of the recommended strategies. However, the use of social IoT platforms may hamper the prestige of the brand as they may be seen as equal to other common brands on the medium. The brands need to advertise and promote their wear using influencer marketing and the use of celebrity and top influencers needs to be done. To maintain the brand association and also promote the brand by giving it added aspirational value. A similar use of OTT platforms can also be made and brands can promote themselves in a leading show by appearing in them. That is by paying producers for screen time. This is an effective way of boosting brand value. Social media in itself is a technological marvel for communication. This needs to be used by luxury fashion brands.
The company can use software tools like BDA ("Big Data Analysis") for the analysis of large amounts of data, "Machine Learning" (ML) for condensation and the extraction of themes and trends from the market, inventory, and other sources by implementing technologies, which can improve the effectiveness of the decision-making process. the application of "Artificial Intelligence" (AI) to decision-making and project management (Hofmann et al., 2020). Numerous well-known businesses have exploited these technologies for a wide range of purposes. The use of strategic management procedures and the development of leadership will be aided by these technologies. Also, research on the needs of the client must inform planning. According to Ribeiro et al. (2021), it is necessary to put cyber tools into practice, such as using AI for automation and BDA for market prediction. Lean manufacturing can be implemented to control processes.
Many brands have started using the 3D simulator to aid customers in making their choices while shopping online. This technology is however not as widespread as it could be. Many of the early adopters have adopted the use of these technologies yet most of the luxury brands choose to remain traditional in their approach to selling online. This hampers the customer experience and also the perception of the customers towards the brand.
Many luxury brands spare no expense to boost customer experience. In the wake of this, they leave a huge carbon footprint. This needs to be reduced. The process of integrating waste materials into the growth of the electric distribution and consumption process is described by their renewable technology (Rostirolla et al., 2021). With the aid of an appropriate distribution of renewable energy sources, the manufacturing units are regulated in this transmission process while clean energy is stored and maintained. The major goals of the sustainable process that will underpin conservation are the decrease of highly polluting materials (Diemuodeke et al., 2019). Significant cuts will be made to the carbon-containing materials with the highest margins.
Figure 5: The Carbon and GHG filtration techniques
(Source: Cen.acs.org, 2022)
It has been noted that the carbon capture, use, and storage technologies can be emphasised as the suite that can play a considerably critical part in achieving the global energy as well as climate objective. The basic operation of the organisation and the vast amounts of CO2 produced by fossil fuels can both be captured by CCUS.
Conclusion
It can be noted in the conclusion that technological development needs t be adopted in the luxury fashion brand for many reasons. The adaptation of technologies has become paramount in the world today for luxury brands. This is because the craftsmanship that qualified a brand as a luxury brand has been exported to other countries and the same producer is possibly making the product for multiple “luxury” brands in Bangladesh, India, or China as these are the major garment producing nations in the world. Hence, the only factor giving aspirational value to the product is the design of the clothing item and its price that makes a customer aspire to possess an item to distinguish themselves from others. Hence, people need to be attracted to the stores rather than the other way around that was traditionally the situation.
The use of technology by luxury fashion brands, market environments, industry trends, brand management, and concerns will all be covered in-depth in this report with high levels of accuracy. According to the findings, pertinent advice must also be given for problem solving.
References
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